Word: cooperate
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...fluke, really, that Cooper got wind of the rotten accounting. A worried executive in the wireless division told her in March 2002 that corporate accounting had taken $400 million out of his reserve account and used it to boost WorldCom's income. But when Cooper went to Andersen to inquire about the maneuver, she was told matter-of-factly that it was not a problem. When she didn't relent, Sullivan angrily told Cooper that everything was fine and she should back off. He was furious at her, according to a person involved in the matter. Cooper, concerned that...
...many auditors, the word of the CFO and an Andersen partner would have been more than enough to leave the situation alone. "You have to understand," says a WorldCom employee, "Scott was probably the most respected person in the company." But, says Cooper, "when someone is hostile, my instinct is to find...
...weeks went on, Cooper directed her team members to widen their net. Having watched the Enron implosion and Andersen's role in it, she was worried they could not necessarily rely on the accounting firm's audits. So they decided to do part of Andersen's job over. She and her team began working late into the night, keeping their project secret. And they had no allies. At one point, one of Cooper's employees bought a CD burner and started copying data, concerned that the information might be destroyed before they could finish...
...late May, Cooper and her group discovered a gaping hole in the books. In public reports the company had categorized billions of dollars as capital expenditures in 2001, meaning the costs could be stretched out over a number of years into the future. But in fact the expenditures were for regular fees WorldCom paid to local telephone companies to complete calls and therefore were not capital outlays but operating costs, which should be expensed in full each year. It was as if an ordinary person had paid his phone bills but written down the payments as if he were building...
Internal auditors, by definition, work in pursuit of a gotcha. So discoveries like this produce a strange "adrenaline rush," says a WorldCom audit employee, "and at the same time, there's a great sadness." Cooper's mother Patsy could see that the investigation had taken its toll. "I noticed a change in her countenance," she says. "There was no cadence to her speech. I noticed a lack of, well, it seemed to be energy...